ESAB Corporation

followed by number one on your telephone key. If you would like to withdraw your question, again, press star one. Thank you. Mark Barbalotto, Vice President of Investor Relations. You may begin your call.

Thanks, Operator. Welcome to ESOP's first quarter 2024 earnings call. This morning, I'm joined by our President and CEO, Shyam Kambyanda, and CFO, Kevin Johnson. Please keep in mind that some of the statements we are making are forward-looking and are subject to risk including those set forth in our SEC filings in today's earnings release. Actual results may differ, and we do not assume any obligation or intend to update these forward-looking statements, except as required by law. With respect to any non-GAAP financial measures mentioned during the call today, the accompanying reconciliation information related to those measures can be found in our earnings press release and today's slide presentation. With that, I'd like to turn the call over to our President and CEO, Sean Cambianda.

Thank you, Mark, and good morning, everyone. Thank you all for joining us today. We continue to make excellent progress towards our long-term goal of becoming a premier industrial compounder that is less cyclical, has higher margins, and delivers stronger cash flow. As you're aware, we exited 2023 with good momentum and have maintained it for the start of 2024. Throughout the quarter, our teams have continued to focus on their growth and margin expansion plans using EBX, and I'm very proud of the results we've achieved. That has allowed us to raise our full year adjusted EBITDA and EPS guidance. Before diving into the numbers, allow me to share a story illustrating how we're actively shaping a better world and how the passion and commitment of our team is making a profound impact within ESAB and the communities we're part of. We've always believed in training the next generation of welders. In March, ESAB, as part of our Future Fabricators Program, participated in the Agriculture Mechanics Competition in Houston, Texas, where over 1,500 high school students from over 250 school districts took part. Many students were fabricating solutions for their farm, while others were creating equipment to benefit their communities. This program aligns perfectly with our vision statement, shaping the world we imagine. Such events provide a fantastic opportunity to engage kids in engineering and problem solving, fostering their creativity. ESAB donated over $500,000 worth of equipment and accessories and prizes to empower these young innovators to continue creating new solutions and becoming the next generation of leaders in our industry. In the future, I plan on sharing more stories about how ESAB is shaping the world we imagine. Moving to slide three, another solid quarter, another step forward in the direction of our 2028 goals. Sales of 656 million were a first quarter record as our team delivered 200 basis points of organic sales growth. Adjusted EBITDA improved by 140 basis points to a record 18.8%. Notably, what fueled our growth was our equipment and automation product lines. And within automation, our welding cobot expanded triple digits year over year and high double digits sequentially. We anticipate sustained demand for our automation products for the remainder of the year. Our gas control business also grew in the period with strong demand on the industrial side as a result of secular tailwinds associated with energy transition, while our specialty and medical gas business continues to execute well. Another standard aspect of the quarter was the strength of our global footprint. Our unmatched geographic strength continues to propel our growth, buoyed by sustained high demand from pivotal markets like India and the Middle East. The completion of the Sager acquisition and today's announcement of our agreement to acquire Sumic allows us to serve our customers better and continues to extend our portfolio to higher margin products and into less cyclical end markets. Our focus on EBX continues to uncover fresh avenues and opportunities for margin expansion. I was pleased to see the quality and the number of Kaizen's rise within our business. Furthermore, to strengthen our balance sheet, we successfully executed our bond offering. positioning ESAB well to deliver as a premier industrial compounder. None of these achievements would have been possible without the focus and hard work of our global associates, so let me take a moment to thank them for their dedication and commitment to our goals. Moving to slide four to discuss the progress we've made in shifting our product mix. As I mentioned in the past, in 2016, we were primarily a filler metal business. And today we have positioned ESAB for growth in both filler metal and equipment. This slide highlights the transformation of our equipment product line and how it's continuing to improve ESAB globally. Since 2016, our share in equipment as part of ESAB's total sales has grown by 500 basis points. Now, I'm the first to acknowledge that this is a gradual journey. but we can see what is possible as we continue to move to a more favorable mix. To add, our new equipment products continue to receive accolades. Most recently, our battery-powered Bolt, our Rustler, and Rogue equipment received the prestigious European Red Dot Award. This is on the back of accolades from Popular Mechanics and Construction Equipment Top 100 new products. We continue to invest in new products and are excited about the rollout of several game-changing products this year, as well as the extension of our Indosuite offering with FlowCloud, which will continue to differentiate ESOP and add value to our value proposition to customers. Moving to slide five to talk about our acquisitions. Sager extends our product line and helps us service our customers better in the less cyclical higher margin repair and maintenance and market. SUMIC extends our product line into higher growth light automation and market and improves our higher margin equipment portfolio in the Americas. Both these acquisitions are margin accretive and were acquired at attractive multiples. These acquisitions underscore our commitment to our compounder strategy and our discipline to ensure acquisitions meet both our strategic and financial goals, and as a result allows ESOP to create long-term value for our stakeholders. Our M&A pipeline continues to strengthen with over $7 billion in prospective targets and supports our long-term growth objectives. With a strong balance sheet and free cash flow, we're well positioned to capitalize on these opportunities to achieve our 2028 goals. Turning to slide six to talk about our first quarter financial performance. As mentioned, quarterly sales reached a first quarter record of 656 million, with adjusted EBITDA also reaching a first quarter record of 123 million, expanding 140 basis points year over year to 18.8%. Our end markets continue to be resilient with strength in India and the Middle East. In addition, we continue to move ESOP into less cyclical, higher margin end markets. Moving to slide seven, in the Americas, organic sales grew by 300 basis points, driven by strong price performance of 500 basis points. Volumes declined, reflecting adverse weather conditions in January. FX was negative as a result of our year-over-year headwinds in South America. Our continued focus on EBX initiatives translated into an impressive 130 basis points expansion in adjusted EBITDA margins. Our new equipment products, continue to generate excitement with end customers and channel partners. We are seeing strength in oil and gas, renewables, and defense. This is being offset by softness in the capital goods and markets. Product simplification initiatives are now focused on growth, and we're actively increasing our exposure to less cyclical end markets. Moving to slide eight, which highlights the performance of our EMEA and APAC region. Another fantastic performance by our team in Europe, Asia, and the Middle East, with total sales growing by 100 basis points. Driven by strong volume that grew 500 basis points, the region's performance reflected great execution and strong demand in India and the Middle East market. EBX initiative, including net price management, contributed to a significant 140 basis points expansion in adjusted EBITDA margins. Our strategic focus, coupled with operational excellence, positions ESAB for continued growth and value creation. On that high note, let me hand it over to Kevin for further insights on our progress on slide nine.